Assigning
I have a property (possibly) that is appraised at 240K 3 months ago, area is mid to upper class homes. No homes in there are selling for less than 255K. Realtor (not involved, friend of mine) did CMA and said house should sell for 260 - 280K roughly. There are no homes for sale in this area except 1 and it is listed at 275K.
I want to get a contract on it today and assign the contract for 230K .
Does this sound like a good deal to people.
I do not know of any Investors to call at this time. I'm new and just starting out CREI. I do have homes I have bought and are doing L/O's on but they are lower end houses 50 - 70K. so this is my first BIG one.
Any help, suggestions would be appreciated.
Dave
Posted: 21:50 on 09-19-2003
--------------------------------------------------------------------------------
What is average DOM (days on market) in that neighborhood?
What is your exit strategy? Flipping? lease option? Are you planning to assign lease option, or assign sales contract?
If you are planning to rent, are there a lot of tenants renting in that price range?
Taking the bottom number you realtor friend provided (260K), whe you look at the numbers you are only getting a 12% discount (230/260). That is not very much. Most investors shoot for at lease 20%, if not 50-70%.
Is seller desperate? Would they do a subject 2?
Are you putting a clause in to allow yourself time to get an assignment before you have to make payments?
...just a few thoughts.
Good Luck!
You did not mention what your margin would be.
I would try to tie the house up with a contract for sale with an assignability clause and give your self a three week weasil clause like ( subject to engineers inspection) while you
a. examine the property
b. examine the marketability
c. find a buyer.
Unless your margin is pretty high (you are buying well below the 230) it sounds too tight to me to do other that selling before you have to commit.
[addsig]
DOM is 48.
Exit staategy is selling to retail buyer or assigning.
Seller is desperate but too many issues with credit, title etc. Sub to is not the way to go here.
Gregg,
I have quite a few weasle clauses.
I have a assignability clause and have the closing set for 45 business days from today.
I am purchasing for 200K. What would be a fair price for me to offer an investor?
Thanks
Dave
I would do this deal if I were you AND I already had a good idea of who I was to sell to. In my own market I might already have an idea. Not sure where you stand.
If you are trying to sell the unit fast ( and you are) let's not eliminate the end user.
I am an investor, and I would not buy your deal ( for ME to flip) for much more than you are paying for it. ( But I have other things to do with my money right now)
If you are confident with your weasil clause AND confident in the contract being very solid, why not run a quick ad offering a discount house. IN other words, spend a few hunfred bucks looking for your buyer.
Another approach is to find the rental number, do the proforma, and sell it as a perfect 1031 property to an investor.
I have to comment here that I am not privy to the "wholesale" strategies that are sold by the gurus. To me wholesale means buy wholesale and then just sell for the price that gets me out of the deal and balances speed and profit with exposure. The more I can do before I have to commit on a project the better.
If I commit nothing, and just market for a couple weeks, I am more likely to turn a quick (smaller) profit.
[addsig]